Money worries for web retailer

Even fast internet connections can run into trouble with boo's 'full mode' website

The UK-based internet retailer boo.com is reportedly close to collapse, with investors reluctant to stump up an extra $30m (£19m) to bail out the troubled company.

Boo.com sells hip sportswear on the web, and the failure of such a high-profile internet retailer could undermine investor confidence in the whole business-to-consumer online retail sector.

A spokeswoman for the company said it was "still in discussions with investors". Boo.com is expected to fold within days if talks break down.

Boo.com was launched with much fanfare in November 1999, but was plagued by technical problems even before it opened its virtual store.

Reluctant backers

The firm's main shareholder, French billionaire Bernard Arnault, who controls luxury goods group LVMH, is reportedly prepared to provide additional funds, but only if matched by other investors.

Boo.com's other original backers were investment banks JP Morgan and Goldman Sachs, and the Benetton family's 21 Investimenti, and all three are said to be reluctant to commit themselves.

Too flash

The website's design was innovative, with 3D models sporting the merchandise on offer. However, technical problems forced the firm to delay the launch for about half a year.

And while the design was pleasing, it was so advanced that users needed high-speed internet connections to make use of it.

Anybody with a modem slower than 56.6KB was effectively shut out from the customer base.

As a result, orders were slow to materialise.

When the extent of boo.com's problems became apparent, the firm reduced its head count, slimmed down its technology and introduced hefty discounts of up to 40%.

Sales shot up, and boo.com says it is now receiving 5,000 orders a day.

This, however, may not be enough to stave of the threat of further job cuts.

The firm is now said to have used up much of its initial $80m funding.

Boo.com's history, though, could suggest that its problems are unique and not an indictment of all online retailers.

Easy-to-use websites that allow access to all users should have more success than boo.com.

Global ambitions

The company was created by three Swedes, Ernst Malmsten, Patrik Hedelin and former model Kajsa Leander, with the ambition to create a global brand for internet shopping

Boo.com launched simultaneously in six countries, which increased start-up costs and may have contributed to boo.com's problems.

Later this year, boo.com hopes to launch in Japan - if the financial backers give the go-ahead.